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UK Mortgage Freedom Day pushed back as average annual repayments edge up

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Written by: Paloma Kubiak
19/04/2016
Today marks the UK’s Mortgage Freedom Day – when the average new borrower will have earned enough to pay off the annual cost of their mortgage, Halifax reveals.

Tuesday 19 April is the UK’s Mortgage Freedom Day which is based on the average annual mortgage repayment cost of £7,584 and the average net annual income of £26,023.

Halifax has calculated that homeowners with a mortgage – both first-time buyers and home movers who took out a mortgage in the last quarter of 2015 – will today have earned enough on average to cover their annual mortgage payments until the end of 2016.

The big day this year comes a day later than in 2015 (18 April) due to average annual mortgage repayments edging up by £17 during the year.

Rental Freedom Day, which is calculated using annual rental payments as a percentage of average disposable earnings, comes 16 days later on 5 May  – again a day later than in 2015.

Londoners wait the longest

Halifax research shows there’s a wide variation in Mortgage Freedom Days across the country, with homeowners in Scotland and Northern Ireland getting there much earlier on 12 March.

This is followed by Yorkshire and the Humber on 25 March, the North West on 26th and 27th for the North.

However for Londoners, Mortgage Freedom Day arrives on 26 June, three months later than in northern England.

Regionally, the North was the first to achieve Rental Freedom Day on 5 April, just ahead of Yorkshire and the Humber where it fell on 9 April. In comparison, tenants in London have to wait until 13 July.

Craig McKinlay, mortgage director at Halifax, said: “For most homeowners, mortgage payments are the biggest outgoing every month; knowing they’ve earned enough to pay off their mortgage for another year should be a reassuring thought. On the other hand, those who rent will need to work a further couple of weeks to have earned enough to cover their annual rental cost.”

Jeremy Duncombe, director, Legal & General Mortgage Club, said the research provides a good opportunity to think about how much of your monthly income is going towards your mortgage.

“At the moment, borrowers are enjoying historically low interest rates, but it’s important to remember that mortgage rates are not directly linked to Base Rate, which means that circumstances could change at short notice. Anyone who is thinking about remortgaging should therefore speak to a broker as soon as possible, as the deals currently on offer will not last forever.”

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